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Performance Appraisal

Paired comparison method of employee evaluation

For the quality of work: Performance in meeting quality standards
Employees that are rated:
Amy Barbara Charlie Dave Elaine
As compared to:
Amy + + – –
Barbara – – – –
Charlie – + + –
Dave + + – +
Elaine + + + –

Note: Barbara ranks the highest.

Figure 3

effective and ineffective job performance. For example, tive opinions are frequently called for. Many companies
the PA log of an employee, Mr. Campbell, contains use some combination of subjective and objective assess-
Unsatisfactory Incidents as follows: 1/28/2000: “Refused ment for actual performance appraisal.
to try a new work procedure,” and 2/15/2000: “Argued Yet there are numerous problems in the actual assess-
with a customer about the origin of error in the paper- ment of employee performance, mainly due to rater bias.
work.” The log also contains Satisfactory Incidents as fol- Some raters tend to rate all employees at the positive end
lows: 1/20/2000: “Volunteered to help Charlie complete rather than to spread them throughout the performance
his assignment in time”; 2/19/2000: “Trained new scale; this is called leniency. Alternatively, central ten-
employees in safety regulations.” dency, which places most employees in the middle of the
The Multiperson Comparison Method asks raters to scale, also raises concern about possible appraisal error.
compare one person’s performance with that of one or Another common error in performance appraisal is
more others. It is intended to effectively eliminate the pos- the halo effect. This occurs when a manager’s general
sibility of giving the same rating to all employees. In order impression of an employee, after observing one aspect of
to separate performance scores among multiple employ- performance, influences his/her judgment on other
ees, the Forced Choice or Forced Distribution Methods aspects of the employee’s performance.
are adopted. Raters must choose one high performer from Researchers have found that personal preferences,
the list of employees or distribute certain scores to prejudices, appearances, first impressions, race, and gen-
employees at different ranks. For example, only one top der can influence many performance appraisals. Some-
person will get 40 percent, two second-rank persons 20 times raters’ personal opinions or political motives creep
percent, and the bottom one person 10 percent. The into the performance appraisal process. They intentionally
Paired Comparison Method is a special case of the Multi- inflate or deflate performance ratings of certain employees
person Comparison Method. Everyone in the evaluation as a way to punish them or promote them out of the
pool is compared against everyone else as a pair and department.
recorded “plus” or “minus” when the target ratee is better
Using unreliable and unvalidated performance
or worse, respectively, than his/her comparison. The final appraisals may cause a legal problem. A number of court
performance ranks are determined by the number of pos- cases have ruled that the performance appraisal systems
itives. Figure 3 provides an example.
used by many companies were discriminatory and in vio-
lation of Title VII of the Civil Rights Act.
SUBJECTIVITY AND OBJECTIVITY In order to avoid legal problems, companies must
Accuracy is critical to performance appraisal. In order to develop an appraisal system based on careful job analysis
obtain accurate performance information, raters must and establish its reliability and validity. They must give
provide objective and unbiased ratings of employees. clear written instructions to raters for completing evalua-
However, because it is almost impossible to develop a per- tions and provide them adequate training if necessary. The
fectly accurate performance checklist, managers’ subjec- company must allow employees to review the results of

586 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION